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26 HR Magazine «April 2011
Cover Story
Whistle-Blowers:
Threat or
Asset?
Be prepared lest lawsuits proliferate.
By Dori Meinert
C
heryl Eckard repeatedly warned senior managers at GlaxoSmithKJinc that defective drugs were
being produced at its Puerto Rico plant. Rather than address the problems, they fired her
Eckard filed a whistle-blower suit. Last October, GlaxoSmithKline agreed to pay $750 million to settle criminal and civil complaints that the company knowingly sold contaminated drugs made
at the now-closed plant. Eckard received $96 million.
The number of whistle-blower suits—and the related payouts—have been growing in recent years
under federal and state laws aimed at uncovering fraud and protecting the public. Corporate lawyers
fear another surge of whistle-blower complaints will result from passage of the Dodd-Frank Act. The
The author is a senior writerfarHR Magazine.
April 2011 » H R Magazine 27
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fih/n
law, which significantly increases
Steven J. Pearlman, a partner at
rewards and protection to those
Seyfarth Shaw LLP in Chicago, says
blowing the whistle on securities
he has been receiving calls from emviolations, affects publicly held
ployers that want to know how to
The share of workers who reported negative behavcompanies and their private subrespond to the proposed regulations.
ior rose to 63 percent in 2009, an increase from
sidiaries and affiliates.
Employers poured money and training
58 percent in 2 007, according to the Ethics
into complying with the federal SarThe U.S. Securities and ExResource Center's 2009 Natiotial Busitiess Ethics
banes-Oxley Act, enacted in 2002 in
change Commission (SEC) is
Survey report. Women are more likely to report
response to the Enron scandal, Pearlscheduled to release regulations
man says. Now, the SEC's proposed
implementing the law in April. Emwrongdoing than men. Managers are more likely
bounties pose a "risk of evisceratployers better get ready.
to...